Tata Comm completes sale of South African unit to Liquid, to net around Rs 2000 crore

For its around 68% holding in Neotel, Tata Communications will get nearly Rs2000 crore, a move which will help the Indian company pare its net debt of over $1 billion. Nexus Connexion, which is the minority shareholder in Neotel, is also a part of the deal.ETTelecom | February 10, 2017, 18:46 IST

Mumbai: Tata Communications Friday said that it has completed the sale of its South African subsidiary Neotel to Liquid Telecom for an enterprise value of Rand 6.55 billion (Rs 3,287 crore).

For its around 68% holding in Neotel, Tata Communications will get nearly Rs2000 crore, a move which will help the Indian company pare its net debt of over $1 billion. Nexus Connexion, which is the minority shareholder in Neotel, is also a part of the deal.

"(The deal) clearly makes sound strategic sense for Tata Communications and our shareholders. Also, throughout the journey of this transaction, we have actively been seeking the best possible outcome for Neotel’s customers and employees," Vinod Kumar, managing director and CEO, said in a joint statement.

Liquid Telecom, the pan–African telecoms group majority of which is owned by Econet Wireless Global – had entered into an agreement to Tata Communications and Nexus Connexion to acquire Neotel in June 2016.

The closure of the transaction follows the country’s Competition Commission and Independent Communications Authority of South Africa (ICASA) approving the deal in October and December 2016, respectively. The transaction “has created the largest pan-African broadband network and B2B telecoms provider, enabling African companies to be able to connect with each other and internationally on a single fibre network,” the statement said.

Tata Communications, which had acquired 68.5% controlling stake in Neotel in 2009, provides telecom and data services infrastructure through its network of undersea and terrestrial cables, and has been looking to cut gross debt by selling its non-core assets, including its stake in Neotel. The gross debt had included some $300 million in Neotel.

The Indian company had early last year sold announced the sale of its 74 per cent controlling stake in its data center operations in the India and Singapore for Rs 4130 crore ($616 million). The Tatas will retain a 26 per cent stake. A part of this deal proceeds will also go towards paying off debt.

A previously proposed deal by Tata Communications to sell Neotel to Vodacom SA had fallen through due to regulatory complexities earlier this year. Tata Communications though had said it expects its latest with deal Liquid to go through smoothly, since the buyer doesn't have presence in South Africa and hence is unlikely to fall foul of competition laws.

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